Keeping the UK moving – growth of the transport sector

Our Head of Transport Finance, Dale Trenam shares his thoughts on the recent growth of the sector and what we can expect to see during 2021.

Keeping the UK moving is vital to our economy, more so than ever as we face the ongoing challenges of the pandemic.

The latest figures from Companies House show the increasing demand on the Transport and Logistics sector, both during 2020 and throughout the years prior to the onset of Coronavirus. The latest data release shows that this sector has grown by over 155% since 2013. Over 163,000 companies were registered during the year 2019-2020.

Since the onset of the pandemic last year, online shopping has seen a huge increase. During the pandemic’s initial peak in April 2020, ONS figures show that internet sales formed over 30% of total retail sales which was up 49% on the same month in 2019. Online retail sales are still booming in the wake of the most recent lockdown and this continues to put huge demand on delivery firms.

Carriers such as Hermes have been overwhelmed with demand from retailers and more and more independent courier businesses have been established as online retail continues to surge. Last year, Hermes UK announced it would spend £100 million on expanding warehouse capacity and recruiting new staff and this was after it had already spent around £30 million on opening new depots and acquiring additional vehicles to strengthen its infrastructure.

During the lockdowns and ongoing restrictions, travel within the UK has been halted for much of the past year, so coach firms serving the leisure industry have taken a huge hit. However, due to social distancing measures in place within schools, demand for coaches for school travel has increased sharply to ensure that pupils can travel safely and within Covid-19 guidelines.

The recent announcement regarding Coronavirus testing for UK hauliers crossing the border to France is expected to impact the sector and slow haulage. Hauliers are now required to test negative for the virus within 72 hours of leaving the UK for France to be able to continue their journey. However, the ongoing roll out of the vaccine means a network of refrigerated delivery lorries is needed to deliver the vaccines around the country, which has been supported by a number of distribution firms.

Covid-19 aside, the Department for Transport is making large scale investments in transport infrastructure, which includes the UK’s road network. A major project is the A14 road upgrade, which provides a vital link between the Midlands and East Anglia and will be of huge significance to hauliers.

The increasing demand for more eco-friendly travel and green initiatives within the sector is also having an impact and are at the forefront of the sector’s mind. A huge proportion of HGV’s on the UK’s roads are running on empty as they return to depots following deliveries, resulting in wasted fuel, money and time. More and more haulage companies and couriers are beginning to network with each other to collaborate and find back loads to reduce this ‘empty travel’.

Green couriers are beginning to emerge, that operate fleets of battery-powered and ultra-low emission vehicles. Larger companies are also following suit, including the likes of Amazon, which has unveiled an all-electric fleet of delivery vehicles. The company plans to have over 20,000 of these vehicles operating by 2022 and it is highly likely that other couriers will follow suit.